Monthly Archives: April 2012

Rep. Kirk Talbot’s HB-969 — Redefining Fiscal Recklessness

Louisiana celebrates it’s bicentennial this year and — though our state has a long and colorful history of shenanigans — one would be hard pressed to find a more reckless piece of legislation than HB-969 (PDF) by Rep. Kirk Talbot of Jefferson Parish.

The bill is part of the great Jindal public education funding raid that includes grabbing public tax dollars and diverting them into the coffers of private schools in the form of vouchers.

HB-969 is more brazen by an order of magnitude. According to the Legislature’s digest of the bill (PDF), Talbot’s bill clears the way for something called Tuition Scholarship Organizations (TSOs) to emerge in Louisiana. These are, according to the digest, “501(c)(3) tax exempt organization which donates no less than 95% of the monies from donations for scholarships to students for attendance at a qualified nonpublic school of their parent’s choice.”

It’s a pretty attractive set up on it’s face. Anyone interested in promoting private education in Louisiana will be able to make a fully tax deductible contribution to the TSO of its choice. It’s a two-fer — a feel-good, federally tax-exempt activity.

Doubling Their Money!

But, Talbot’s bill goes WAY beyond that. It makes the State of Louisiana a full partner in the enterprise. Yes, the federal tax deduction stands, but HB-969 requires the state to provide those donors a rebate in the full amount of their donation! Not a tax credit or anything like that. A rebate.

The bill requires the Department of Revenue to cut checks to those donors in the amount equal to that which they donated to the TSO or TSOs. There appears to be no limit on the number of TSOs to which an individual or company can contribute; nor is there any cap on the amount of money the State of Louisiana will have to match.

The bill allows contributors to TSOs to double their money in one fell swoop, courtesy of Louisiana taxpayers. First, since they are contributing to a 501(c)(3), TSO donors get to deduct the full amount of their donation from their federal tax return. Then, the Louisiana Department of Revenue will cut them a check for the full amount they donated to the TSO as a token of the state’s appreciation.

If there’s a sweeter deal than that to be found anywhere, it’s in some genetically modified sugar product.

The bill roared through the House in the early days of the current session in the wake of the Jindal voucher blitzkrieg.

Take Off Your Cap!

By the time it reached the Senate, a recognition of the potential impact of the bill raised eyebrows in that chamber. Senator Barrow Peacock of Bossier City introduced an amendment there that would have imposed a $300 million capped to total state obligation on the rebates in any fiscal year. That amendment passed the Senate by a single vote.

Peacock’s amendment forced the bill to go back to the House for approval. The Senate cap was rejected and the bill headed to a conference committee. The bill that emerged from the conference committee no longer had a cap.

On Tuesday, April 24, the Senate voted 32-7 to approve HB-969 without the cap on rebates. The House voted 65-36 (with four absent) to approve the bill on the same day. It now awaits Governor Jindal’s signature to become law.

Madness!

The lunacy of opening what amounts to an unlimited draw on state finances to support private education (and feather the nests of the wealthy) was driven home by another event on the same day the bill won approval in both houses.

The Revenue Estimating Conference (REC) is charged with monitoring state revenue and expenditures to ensure that the constitutional mandate that state budgets finish each fiscal year in balance is observed. On the 24th, the REC concluded that state revenues are not meeting projections in the current fiscal year and it appears that there will be a new hole in the state budget in excess of $200 million.

So, on the day that this new budget shortfall is announced, large majorities in both houses of the Legislature voted to create an unlimited draw on state revenue in the form of HB-969. Representative Katrina Jackson of Monroe, who did not vote on final passage of HB-969, laid out the problem the bill (soon to be law) presents with out a cap. There is no wiggle room in the language of the bill. In the event of future mid-year budget shortfalls, the state will have to cut education and health care in order to meet its obligations to those contributing to TSOs. (See video below for more.)

Follow the LLCs

Anyone with a working knowledge of Louisiana campaign finance recognizes the immense danger HB-969 poses to the state’s finances. Consider the role of Limited Liability Corporations (LLCs) in Louisiana political campaigns. As is seen in every state election cycle, LLCs offer wealthy individuals multiple opportunities to contribute the maximum allowable contribution to candidates. An individual with, say, 20 LLCs could make 20 $5,000 contributions to a candidate for statewide office. That’s $100,000 from one person, all done within full compliance with Louisiana campaign finance law (you know, ‘The Gold Standard’).

Looking at the provisions of HB-969, there is nothing in the bill to prevent a person controlling multiple LLCs from making multiple contributions to TSOs. The ‘double your money’ incentive at the heart of the rebate plan will surely catch the eye of CPAs and financial advisors across the state (thankfully, the rebates are restricted to those who file a Louisiana income tax return).

Where will the money for the rebates come from? From the General Fund of the State of Louisiana. That means the rebates will compete with funding for essential government services, particularly in times of revenue shortfalls like we’ve had in just about every year of the Jindal tenure. Hospital funding will be cut, clinics closed, teachers let go, and higher education cut in order to meet the state’s obligation to these high rollers — er, uh, donors.

At the end of the day, HB-969 is not about education. It is about enabling raids on public resources by the wealthiest individuals in the state that will deprive the state’s people and its institutions of the funds needed to provide essential services.

All of this is being done in the broad light of day under the supervision and direction of an administration that has repeatedly proven itself incapable of managing the state’s finances.

If there has ever been a more cynical and/or reckless piece of legislation enacted here, I don’t think we’d be celebrating our bicentennial this year.

Budget Reality Catches Up On Jindal

How charming? It looks as though Governor Jindal’s economic miracle in Louisiana isn’t such a miracle after all. Not that he’d admit it:

The Revenue Estimating Conference — which decides how much money the state can spend — revised the state’s financial forecast Tuesday night after listening to economists’ projections.The state operating budget that funds schools and other public services is based on those projections. When they fall short, extra money has to be found or spending has to be cut.“The problem isn’t just too high of a forecast. The problem is the economy,” said Greg Albrecht, chief economist for the Legislative Fiscal Office.

Albrecht said the underlying economy is weaker than it is being reported to be. It’s an assessment to which Gov. Bobby Jindal disagrees.

Mind you, this is after the REC reported that revenues were a full $304m less than anticipated, putting more strain on an already beleaguered State operating budget. But after the facts were presented, Jindal refused to address his role in causing the disaster:

Commissioner of Administration Paul Rainwater, the governor’s top budget aide, said state agencies already are aware of the financial problems.“Obviously, we’re going to have to make reductions,” Rainwater said.

The governor tried to strike a positive note during a news conference after the meeting concluded. Jindal said Louisiana’s economy is performing comparatively well. “Obviously, we’re going to work with the Legislature to make sure we have a balanced budget,” the governor said.

Jindal’s positive spin on the state’s economy conflicted with the conversation at the Revenue Estimating Conference meeting.

Well, “OBVIOUSLY” you are  required to balance the budget, but isn’t it also obvious that most of this issue is the result of Jindal’s addiction to one-time money and privatization schemes in his budgeting strategy?

Obviously.

But Jindal wouldn’t have to stray too far from the GOP alternative reality to get advice. None other than the Sinator “Diapers” David Vitter needled Jindal on this front earlier this month:

In an email to supporters, Vitter said the state’s continued use of one-time dollars for ongoing expenses only serves to “kick the can down the road from making the tough, but necessary, budget decisions for our state” because the state isn’t certain to continue to have the money.

“That practice is too akin to Washington’s way of business, and Louisianians rightly acknowledge Washington doesn’t know the first thing about fiscal stewardship,” Vitter wrote.The senator urged “conservative reformers” to restrict the use of such budget maneuvers that shuffle one-time dollars to continuing expenses.”It will certainly make budget decisions tougher, but I believe it will also make our fiscal house healthier in the long run,” Vitter said

The Louisiana Family Forum Financials: More Questions Than Answers

Nearly a year ago, I wrote about the financial statements, specifically the “990” forms, submitted to the IRS by the Louisiana Family Forum (the LFF), an organization that is roundly considered the most powerful lobbying group in the State of Louisiana. These forms paint an intriguing, albeit incomplete, picture of the operations of an organization responsible for a litany of controversial laws. Among other things, the LFF was the principal force behind a statewide ballot initiative against gay marriage. The organization has vociferously opposed a bill that would have better protected public school children against bullying. And in 2008, along with the assistance of the Discovery Institute and others, the LFF helped to author and then pass the Louisiana Science Education Act, which implicitly endorses and facilitates the teaching of religious beliefs in the science classroom. The leader of the LFF, Gene Mills, is a fixture at the State Capitol, and arguably, Mills is the single most influential unelected leader in Louisiana politics. And perhaps most interestingly, Gene Mills and the Louisiana Family Forum operate, entirely, as a non-profit and rely, almost entirely, on tax-deductible donations to fund its efforts and its payroll.

Of course, in and of itself, there is absolutely nothing illegal or improper when a group of like-minded advocates form an organization to advance their policy goals in an open, democratic forum. But certainly, the laws protecting and providing for the establishment of non-profit organizations were not intended to subvert the democratic process or to allow our most powerful lobbyists the ability to finance their careers and advance their agendas as if they are protected charities, as if they are somehow exempt from the laws that govern private economic activity and regulate lobbying. As the old adage goes, with great power comes great responsibility.

The Louisiana Family Forum officially considers itself to be an educational organization, but for years, the LFF’s backers, legislators, and the media have properly identified it as a lobbying group. And again, not just any lobbying group, but the most powerful one in Louisiana. When the legislature is not in session, the LFF is, for all intents and purposes, dormant. Indeed, the organization’s raison d’etre has nothing to do with educating the general public; it’s about “educating” our lawmakers, which is the definition of lobbying.

To be fair, Gene Mills is a registered lobbyist, but, incredibly, for the last several years, during which time numerous people affiliated with and even employed by the LFF have testified to the legislature on its behalf, Mills has remained its one and only registered lobbyist. Anyone who follows Louisiana state government knows that, while Mr. Mills may be powerful, the LFF is not and has never been a one-man show. Yesterday, during the State Senate Education Committee hearing on the repeal of the Louisiana Science Education Act, Southern University Law professor Michelle Ghetti, opposing the repeal, testified that she helped to craft and author the original legislation. Now, I could be wrong, but I doubt that Ms. Ghetti did this work pro bono. I doubt she helped write the Louisiana Family Forum’s signature law, the LSEA, as a favor. But during her testimony, she was never asked the most obvious questions: If you wrote this bill, who paid you, how much did they pay you, and was it ever disclosed? Was it Senator Nevers? The Discovery Institute? The Louisiana Family Forum? Or did you provide your services gratuitously or for free? The same questions can and should be asked of others, like former Judge Darrell White, who once appeared on the LFF’s payroll and then suddenly vanquished, even though he continued to publicly champion its efforts.

I mention this all for a reason: The Louisiana Family Forum continues to dole out hundreds of thousands of dollars every year to the Louisiana Family Forum Action (the LFFA), its sister organization which is prohibited from receiving tax-deductible donations but is allowed a more expansive ability to lobby and influence the legislature. And today, according to its disclosures, in addition to paying Mr. Mills for his lobbying work and one other full-time employee, Dale Hoffpauir, the LFF doles out over $120,000 a year in “other” expenses related to employment, presumably consulting contracts which are not subjected to disclosure. Meanwhile, the LFFA is the beneficiary of tax-deductible donations via the LFF, which it could otherwise never receive. Mr. Mills, presumably, makes money as a lobbyist for the Louisiana Family Forum (considering he is its only registered lobbyist and it disclosed over $42,000 in lobbying expenses in its last report), and he receives a full-time salary from the Louisiana Family Forum Action, nearly $90,000 a year.

It’s not an insignificant amount of money. The LFF is apparently spending six figures every single year on consulting services that are not disclosed. This begs the question: Who is getting paid? And while the nuances in the tax code between 501c3s (tax-deductible non-profits) and 501c4s (advocacy arms) may seem impossibly labyrinthine, it’s actually quite simple: Under the current tax regime, a 501c3 that effectively operates as a lobbying group may attempt to shield itself from exposure by setting up a 501c4, as long as the 501c4 raises its own funding. The problem for the Louisiana Family Forum, insofar as I see it, is that it’s engaging in an obvious shell game, operating its 501c4, almost entirely, with the tax-deductible donations it receives from its 501c3. You can do that, no doubt, but there is no obvious advantage: Every penny that a 501c4 receives from a 501c3 is subjected to laws that govern 501c3 expenditures. Or, at least, it’s supposed to be.

I need to be careful here: I am not accusing Mr. Mills or the Louisiana Family Forum of doing anything illegal. I’m merely suggesting that they’re being shady, that, to me, it appears as if the organization has, for years, acted like it has something to hide– whether it’s shielding the full disclosure of hundreds of thousands of dollars in consulting services or ineptly exploiting the distinctions between 501c3s and 501c4s. But more importantly, I strongly believe that, as a matter of public policy, we should not provide a tax advantage to a small, politically-connected cabal of powerful lobbyists who pretend as if their alleged religious convictions entitle them to special treatment under the law.

Gene Mills may call himself a reverend, but he earns his living as a lobbyist.

LFF’s annual report: 2010-721416555-07ba1665-9

LFFA’s annual report: 2010-201380165-07c0636f-9O

Jindal Again Mocked After Speech To Out-Of-State Republicans

We all remember the awful beating Jindal took after his national debut. During his response to President Obama in 2009, Jindal was mercilessly mocked both on the content of the speech, and his bizarre presentation.

Unfortunately for Bobby, his national aspirations were slapped back again last night:

La. Gov. Jindal finds New York crowd big, but not easy

Louisiana Gov. Bobby Jindal, sometimes mentioned as a candidate for vice president, didn’t exactly wow the 700 or so gathered for the annual New York Republican dinner at the midtown Sheraton.

His keynote speech started out well enough, many Republicans said, but droned on far too long. He told a stale joke (My father walked to school. Uphill. Both ways.) then went deep into the weeds of the Bayou State’s financials — focusing at one point on “UAL” debt.

He received mild, occasional applause but, all the time, the volume of conversation at the 100 or so tables rose noticeably as attention waned.   

And, after a dinner break and Jindal’s departure, the next two speakers made pointed references. “I’m going to speak a little shorter than the prior speaker,” Senate Majority Leader Dean Skelos (R-Rockville Centre) said — generating applause.

“My father gave me some great advice, too,” Assembly Minority Leader Brian Kolb (R-Canandaigua), said referring to a part of Jindal’s speech. “Be brief and be gone.”

Jindal’s team placed copies of his book, “Leadership and Crisis,” on the chairs throughout the Sheraton ballroom. Afterward, some New York Republicans joked about trying to give their copy away.

He might be Babe Ruth in Louisiana’s minor league, but he can’t hit a lick in the majors.

UPDATE: Mayor Mitch Does The Deed And Endorses Former Senator Cynthia Willard-Lewis

As reported here last week, Mayor Mitch Landrieu went ahead yesterday and endorsed a very questionable character in Former State Senator Cynthia Willard-Lewis. Mayor Landrieu cited Cynthia Willard-Lewis’ race and her willingness to work with him as reasons for his decision:

“I’m a politician. And so I’m not going to pretend that I don’t think about political things,” he said. “I always do. And there are important strategic factors that you always consider. But it really does always come back to, at this point in time, given this choice, what is the best choice for all of the people of the city of New Orleans.”

“I need someone who’s going to be a partner with me to represent all of the people of the city of New Orleans,” Landrieu said to a cheering crowd of more than 100 gathered at the New Orleans Healing Center on St. Claude Avenue.As a white mayor of a city that is 60 percent black, Landrieu has to walk a fine line in matters of race.

Interesting to see what happens here, and if Landrieu really is going to fall prey to that old adage, “if you lie down with dogs, you wake up with fleas.”

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